family economy

Kids and Money: Family Economy

Back in this post, I mentioned that we were beginning what we call our ‘Family Economy’. I’m not sure why we chose that name as it really doesn’t describe what we’re doing, but with 4 boys 15 years and younger, things often don’t make sense.  (Anyone feel me on that?)

To describe the Family Economy a little better, it’s a system of payment of wages to the child for completely tasks (chores and other things) throughout the week. Originally, this idea came from Shawni @ 71toes.com and this post. When I came across it, I knew we had to try it.

But let’s back up a little bit. Let me tell you WHY  I feel my children should be receiving a wage and NOT an allowance.

First, I want to describe to you what I see with kids today. In general (an by no means are all kids included in this group), I see a lot of kids who are being brought up having no concept of money or the real cost of living. They’re attending sports camps that cost hundreds of dollars, wearing clothes that are extremely over priced, get all the new gadgets as they hit the market, and watch mom or dad pay for it all on a credit card.  Kids are given no responsibility to pay for things themselves.

Which leads to the next thing. Due to all the government and insurance regulations in place, a kid is lucky to even find a job. When I was a teenager (you know…last week  ), when you turned 16, a lot of kids got a job. You worked at the grocery store, waitressed, or drove to the neighboring ‘big’ town for a job at a fast food place or one of the big chain retail stores.

If you were like me and had a parent who owned a business, or even one who farmed, you started working a lot earlier than that. I started babysitting when I was 11 and working for my parents when I was 12.  My son is 15, and although in Illinois a child can work at 14 (with some hoops to jump through) no one will hire a child younger than 16. My son has been looking for a job for almost a year and a half. Everywhere he inquires he’s met with the same answer, “Sorry. You have to be 16.” It’s frustrating for him and frustrating for us as parents trying to teach our children financial responsibility.

Lastly, I am anti-allowance. I don’t believe that handing my child money just for existing is doing anyone any favors.

Here’s the nuts and bolts of our Family Economy:

  • Each child has the opportunity to earn a wage equal to his age every week.
  • Each child has a chart with his assigned jobs and chores that must be filled out each day.
  • If a child misses one mark, he has the chance to make it up by doing an extra job. If he chooses not to make it up, his weekly wage is cut in half.
  • If a child misses 2 marks, he can make one up to be paid half wage, otherwise he won’t be paid at all.
  • If a child misses 3 or more marks, there will be no wage that week.
  • The kids are required to Give 10%, Save 20%, and the rest is their Spend money.
  • When the boys turn 12, they are required to pay for half of their clothes and shoes and all their spending money. We won’t pay more than our spending limit on clothes that we paid before. So, if the kids decide they want a pair of $120 shoes, I’ll only pay $50.
  • If they want to do camps or anything like that, they have to pay half also (although there may be instances where we’ll pay more.)
  • We pay for socks, underwear, and special occasion clothing.
  • The two oldest boys must pay for their portion of the cell phone bill after their initial two year contract is up. For Jeremy that will be this next summer and for Punkin it will be November 2014.
  • Their Save money is put into the family bank. They receive 10% interest accrued monthly on their savings. They’ve all had savings accounts in banks before, but here they’ll be able to earn more money on their savings-like 1000% more. This is their reward for working to save more money.
  • They can’t withdraw from their savings.
  • They can choose who or what they want to give their ‘Give’ money to.
  • We have payday every two weeks.
  • Edit: We use check registries to keep track of the money (the kids are responsible for filling out their registries when they get paid.)

Jeremy has a contract with us to pay back some money he borrowed to put towards his new computer and to pay an old cell phone overage debt, so that poor kid only received $1 this payday. I thought it was a great lesson to be learned. He has to pay us $20 a month, and he’s only got $42 total in his spend account for four weeks. He’s really going to have to economize and make wise spending choices so that he’ll have enough  money to pay for his clothes.

We’re in our third week of Family Economy, and I am very pleased with how excited the kids were to get paid for their hard work. Both older boys were paid for two solid weeks, while the two youngest were only paid for one week. I’m pretty serious about them having to do all their chores for them to get paid, and believe that if I was lenient at the beginning, it would just follow on through.

I can remember as a kid working for my dad, he told me, “Now that you’re getting paid, you’re going to be responsible for buying your clothes. You can either spend all your money on the expensive shit, or save some of it.” It was a small obscure conversation that’s followed me through my life. I never had the highest costing brand name clothes in school, but I always had gas money, spending money, and money in the bank. I was even able to pay for a weeklong trip to Mexico when I was 15 (with a school group).

My goal for the kids is that they learn that although money isn’t everything, it sure is nice to have enough to meet your needs and to give some away. I want them to learn to budget what they do have and to be content to live within their means.

I believe this will be a great way to do that.

What’s your opinion on allowance? Do you have a family economy of your own in place?

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